LI Network
Published on: November 26, 2023 at 15:05 IST
A Division Bench of the Delhi High Court, comprising Justices Vibhu Bakhru and Amit Mahajan, recently ruled that the interim relief granted by the Debts Recovery Appellate Tribunal (DRAT) during the pendency of an appeal does not automatically extend upon remand unless a prima facie finding supports the need for such an extension.
The court, dismissing the writ petition filed by petitioner-Deco Industries, rejected the claim that the interim order in its favor should have been extended. The bench observed:
“If the same is accepted, then in every case where the Court decides to remand the matter to the Court of first instance or any Adjudicating Authority for consideration – till such time the matter is considered – the same would require continuation of the interim orders, even if, prima facie, a case for such orders has not been established.“
The dispute originated from a loan obtained by Deco from Karnataka Bank, secured by equitable mortgages on two properties. Following Deco’s default, possession notices were issued by the bank. The financial interest in Deco was later assigned to JM Financial by the bank.
Deco’s Securitization Applications were dismissed by the Debt Recovery Tribunal (DRT), leading to an appeal to DRAT. DRAT allowed Deco’s appeal, remanding the matter back to DRT for fresh consideration. It observed the failure of DRT to determine if the transaction between JM Financial and Karnataka Bank was a sale or an assignment of debt under the SARFAESI Act.
Deco argued that the interim protection granted by DRAT for the mortgaged properties should have continued during the remand. However, the court, prima facie, opined that the transaction was not a sale of Deco’s properties.
The court held that Deco could seek interim relief before DRT and that DRAT’s interim relief was not warranted during remand without a prima facie finding in Deco’s favor. The petition was thus dismissed.
Advocates Sangram Patnaik, Rajiv Gupta, Manish Kumar Mathur & Pushkar Anand appeared for petitioner-Deco Industries.
Case Title: Mis Deco Industries India v. JM Financial Assets Reconstruction Company Ltd through its AO Kumar Gaurav & Ors., CONT.CAS(C) 1402/2022 (and connected matter)